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Cash for clunkers will get many people even more indebted
- Thread starter crgarcia
- Start date
;-) I never intended to make it personal, I spoke in the figurative "I".
So, you still dont find it upside down to disadvanage those who always immediately paid for what they purchased even though its about job interviews or about credit unrelated issues in life? Then I guess there is not point arguing with you...
So, you still dont find it upside down to disadvanage those who always immediately paid for what they purchased even though its about job interviews or about credit unrelated issues in life? Then I guess there is not point arguing with you...
Quote from jprad:
Bullshit, I never claimed anything of the sort about you specifically, so stop making this personal.
Second, if you don't use credit much you won't have much of a credit history and your score is certainly going to be lower than those who have strong credit histories as a result. But, you can cut the crap because it's not going to be down to the level of those who've demonstrated themselves to be financially irresponsible either.
yes I do to be honest. Because I think you actually totally miss the topic. You are comparing relative to other fixed mortgages and maybe yours was not bad (I dont live in the US, can't say). But the point here is that you still pose a huge credit risk to your bank or mortage association in case you lose your job or have serious medical bills to cover over someone else who paid up their house fully in cash. That was my point all along.
Sure not everyone can afford to pay the house in cash but thats not under discussion. Under discussion is that someone who did pay in cash and otherwise has a preference to shy away from debt spots a lower credit score than you do, given you made your payments so far on time. This does not change anything about the fact that you still have the same probability of losing your future stream of cash flows than the guy who paid the house in cash. Difference is, you owe a huge amount whil the other guy does not. Why should the other guy be disadvantaged vs you in credit-unrelated issues where currently credit scores are used?
Sure not everyone can afford to pay the house in cash but thats not under discussion. Under discussion is that someone who did pay in cash and otherwise has a preference to shy away from debt spots a lower credit score than you do, given you made your payments so far on time. This does not change anything about the fact that you still have the same probability of losing your future stream of cash flows than the guy who paid the house in cash. Difference is, you owe a huge amount whil the other guy does not. Why should the other guy be disadvantaged vs you in credit-unrelated issues where currently credit scores are used?
Quote from jprad:
You're questioning a 15yr fixed mortgage @ 5.375%?
You are a complete ass.
I'm sorry I even bothered...
Quote from Maverickz:
Oh I forgot to add that I have a good friend that worked in new and used auto sales for many years. His exact words to me were: "There is no such thing as a 'good deal' from a dealership. We only make you think you got one."
He went on to say that the discounts people think they are getting come from excess padding of the price the dealer wasn't worried about getting anyway. This way those that don't know how to negotiate get really screwed and those that do only get partially screwed.
Not familiar with high ticket price sales?
Of course they pad the price. Then they drop levels depending on the consumers. Very few pay the sticker price.
Your friend may be a burned out car salesman but my friend worked export of cars bought here to ship & sell overseas. They paid cash, on the spot and would bid 25-30% below the sticker price, sometimes 40%. This only worked if they had cash or cashier's check with a fast straight forward, no nonsense approach. Had they even mentioned that they would get financing, it would go nowhere.
If you cannot understand the reasons WHY this tactic works in autos, or real estate or any other items that are high priced and are heavy on consumer financing, I suggest you learn the basics of finance & cash flows.
things must have changed. when i was in the car business cash was no incentive. in fact financing was much prefered. the finance guy in the dealership was generally a money maker. when you write up financing you have an oppertunity to pad the deal with money making kickbacks on things like credit life,extended warranty,undercoating,maintaince contracts plus you often get kickbacks from the outside finance companies. these things often add up to more profit than the car sale itself.Quote from Anaconda:
Not familiar with high ticket price sales?
Of course they pad the price. Then they drop levels depending on the consumers. Very few pay the sticker price.
Your friend may be a burned out car salesman but my friend worked export of cars bought here to ship & sell overseas. They paid cash, on the spot and would bid 25-30% below the sticker price, sometimes 40%. This only worked if they had cash or cashier's check with a fast straight forward, no nonsense approach. Had they even mentioned that they would get financing, it would go nowhere.
If you cannot understand the reasons WHY this tactic works in autos, or real estate or any other items that are high priced and are heavy on consumer financing, I suggest you learn the basics of finance & cash flows.
Quote from vhehn:
things must have changed. when i was in the car business cash was no incentive. in fact financing was much prefered. the finance guy in the dealership was generally a money maker. when you write up financing you have an oppertunity to pad the deal with money making kickbacks on things like credit life,extended warranty,undercoating,maintaince contracts plus you often get kickbacks from the outside finance companies. these things often add up to more profit than the car sale itself.
You're talking about manufacturer owned dealers. It's a well known fact that they did not even make money from the car sale but from the finance unit.
As a result, they are feeling it the worst. Just look at GM, who was the most famous for this approach.
I agree with the previous poster. A straightforward cash buyer who has no other interest but buying a car itself is alwas a better deal to the salesman than someone having to finance the car. Every car dealer who thinks otherwise has either missed the basic econ classes in community college or is otherwise in bed with the guy from the finance department (as pointed out about some manufacturer owned dealerships).
When I bought my car I simply said "you find $xxx of cash in this bag for this car. I am not here to negotiate, drink coffee, or argue, are you willing to sell this car to me right here right now or shall I rather leave to check with the closest nearby dealership?" After much cursing around he sold me the car xx% under sticker price just about 5-7 minutes later. And tell you what: I am sure I could have gotten the same deal with any other dealership. I would have never had this leverage had I begged the guy for credit.
This was obviously some time ago, I bet they now bend over backward just to have you drive over to their yard to have a look.
When I bought my car I simply said "you find $xxx of cash in this bag for this car. I am not here to negotiate, drink coffee, or argue, are you willing to sell this car to me right here right now or shall I rather leave to check with the closest nearby dealership?" After much cursing around he sold me the car xx% under sticker price just about 5-7 minutes later. And tell you what: I am sure I could have gotten the same deal with any other dealership. I would have never had this leverage had I begged the guy for credit.
This was obviously some time ago, I bet they now bend over backward just to have you drive over to their yard to have a look.
Quote from vhehn:
things must have changed. when i was in the car business cash was no incentive. in fact financing was much prefered. the finance guy in the dealership was generally a money maker. when you write up financing you have an oppertunity to pad the deal with money making kickbacks on things like credit life,extended warranty,undercoating,maintaince contracts plus you often get kickbacks from the outside finance companies. these things often add up to more profit than the car sale itself.
When buying a new car at a dealership, there is little to no incentive to buy with cash. Most dealerships now are working with their own financing arm, and will steer you towards their financing department to get you to sign on a higher rate, and thus get a kickback. Everyone is working around the invoice price and factory incentives, the MSRP is a nice little number for the sheeps who gets slaughtered anyways. Most savy buyers already knows the invoice prices and the incentives from the manufacturer, they are just trying to get as close to this number as possible. Dealership will try to pad the car with extras, get you to finance through them at a higher rate, and obviously stiff you on the trade in. So cash is pretty much not a significant factor unless the dealership is going under soon. Even then, many are not going to unload their car for peanuts because they know the next dealership will take on the lot.
I have all cash to make a purchase, so I know what's up. It's not going to get you any sweetheart deals. Maybe a 1%-2% drop because they figure they can get the interest off the cash, but really not anything significant.
Especially now, with the cash for trash deal, the dealers are flushed with sales. They'll be fat and happy for the rest of this year, hell, they got another 2 billions from the US taxpayers...laughing all the way to the bank.
I have all cash to make a purchase, so I know what's up. It's not going to get you any sweetheart deals. Maybe a 1%-2% drop because they figure they can get the interest off the cash, but really not anything significant.
Especially now, with the cash for trash deal, the dealers are flushed with sales. They'll be fat and happy for the rest of this year, hell, they got another 2 billions from the US taxpayers...laughing all the way to the bank.
Quote from Anaconda:
You're talking about manufacturer owned dealers. It's a well known fact that they did not even make money from the car sale but from the finance unit.
As a result, they are feeling it the worst. Just look at GM, who was the most famous for this approach.
Well to be fair my friend DID work for a Manufacturer owned dealership.
Quote from asiaprop:
I agree with the previous poster. A straightforward cash buyer who has no other interest but buying a car itself is alwas a better deal to the salesman than someone having to finance the car. Every car dealer who thinks otherwise has either missed the basic econ classes in community college or is otherwise in bed with the guy from the finance department (as pointed out about some manufacturer owned dealerships).
When I bought my car I simply said "you find $xxx of cash in this bag for this car. I am not here to negotiate, drink coffee, or argue, are you willing to sell this car to me right here right now or shall I rather leave to check with the closest nearby dealership?" After much cursing around he sold me the car xx% under sticker price just about 5-7 minutes later. And tell you what: I am sure I could have gotten the same deal with any other dealership. I would have never had this leverage had I begged the guy for credit.
This was obviously some time ago, I bet they now bend over backward just to have you drive over to their yard to have a look.
Three things:
First IF what you say is true and cash is better to a dealer than someone wanting credit FROM the dealer, then someone walking in with cash they got via loan from their personal credit union would be the same right? The dealer gets his cash either way.
Second, as others have pointed these days MOST dealerships (even Crazy Larry's Used Cars) ARE in bed with some finance "company" (might be Loan Shark Louie but that's not the point). This means they WANT you to get financing through them. Why? Because they can make a couple of K selling to a cash buyer sure BUT they can make that same couple of K off of a financed sale PLUS years of interest on the loan. Also if they can keep people indebted to them for 3-5 years and constantly roll more people onto payment plans as others roll of it, it makes income planning MUCH easier for them and evens out the bad months with the good....kind of like "flex pay" programs that electric companies are now offering.
Third, as I have already said, IF the dealer does NOT have a financing arm to get the residual interest from, then to them a loan is SAME AS CASH. Why? Because as soon as the loan goes through THEY GET THE FULL AMOUNT IN CASH.
So really where is the cash incentive for a dealer? Don't get me wrong if you think you got a good deal on your car then the dealer DID HIS JOB RIGHT! LOL.